Problem 16-6 Skysong Corporation is preparing the comparativefinancial statements for the annual report to...

70.2K

Verified Solution

Question

Accounting

Problem 16-6 Skysong Corporation is preparing the comparativefinancial statements for the annual report to its shareholders forfiscal years ended May 31, 2017, and May 31, 2018. The income fromoperations for the fiscal year ended May 31, 2017, was $1,775,000and income from continuing operations for the fiscal year ended May31, 2018, was $2,566,000. In both years, the company incurred a 10%interest expense on $2,446,000 of debt, an obligation that requiresinterest-only payments for 5 years. The company experienced a lossfrom discontinued operations of $617,000 on February 2018. Thecompany uses a 40% effective tax rate for income taxes. The capitalstructure of Skysong Corporation on June 1, 2016, consisted of954,000 shares of common stock outstanding and 20,100 shares of $50par value, 5%, cumulative preferred stock. There were no preferreddividends in arrears, and the company had not issued anyconvertible securities, options, or warrants. On October 1, 2016,Skysong sold an additional 490,000 shares of the common stock at$20 per share. Skysong distributed a 20% stock dividend on thecommon shares outstanding on January 1, 2017. On December 1, 2017,Skysong was able to sell an additional 794,000 shares of the commonstock at $22 per share. These were the only common stocktransactions that occurred during the two fiscal years. Identifywhether the capital structure at Skysong Corporation is a simple orcomplex capital structure. Determine the weighted-average number ofshares that Skysong Corporation would use in calculating earningsper share for the fiscal year ended: Weighted-average number ofshares (1) May 31, 2017 (2) May 31, 2018 Prepare, in good form, acomparative income statement, beginning with income fromoperations, for Skysong Corporation for the fiscal years ended May31, 2017, and May 31, 2018. This statement will be included inSkysong’s annual report and should display the appropriate earningsper share presentations. (Round earnings per share to 2 decimalplaces, e.g. $1.55.) SKYSONG CORPORATION Comparative IncomeStatement For Fiscal Years Ended May 31, 2017 and 2018 2017 2018 $$ $ $ Earnings per share: $ $ $ $ Question Attempts: 0 of 5 usedSave for later Submit Answer

Answer & Explanation Solved by verified expert

4.3 Ratings (521 Votes)

1 The Capital Structure of Skysong Corporation is simple because it is having only one type of common stock outstanding and cumulative Prefrence Stock and not having any other stocks 2 Comparative Income See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Transcribed Image Text

In: AccountingProblem 16-6 Skysong Corporation is preparing the comparativefinancial statements for the annual report to its...Problem 16-6 Skysong Corporation is preparing the comparativefinancial statements for the annual report to its shareholders forfiscal years ended May 31, 2017, and May 31, 2018. The income fromoperations for the fiscal year ended May 31, 2017, was $1,775,000and income from continuing operations for the fiscal year ended May31, 2018, was $2,566,000. In both years, the company incurred a 10%interest expense on $2,446,000 of debt, an obligation that requiresinterest-only payments for 5 years. The company experienced a lossfrom discontinued operations of $617,000 on February 2018. Thecompany uses a 40% effective tax rate for income taxes. The capitalstructure of Skysong Corporation on June 1, 2016, consisted of954,000 shares of common stock outstanding and 20,100 shares of $50par value, 5%, cumulative preferred stock. There were no preferreddividends in arrears, and the company had not issued anyconvertible securities, options, or warrants. On October 1, 2016,Skysong sold an additional 490,000 shares of the common stock at$20 per share. Skysong distributed a 20% stock dividend on thecommon shares outstanding on January 1, 2017. On December 1, 2017,Skysong was able to sell an additional 794,000 shares of the commonstock at $22 per share. These were the only common stocktransactions that occurred during the two fiscal years. Identifywhether the capital structure at Skysong Corporation is a simple orcomplex capital structure. Determine the weighted-average number ofshares that Skysong Corporation would use in calculating earningsper share for the fiscal year ended: Weighted-average number ofshares (1) May 31, 2017 (2) May 31, 2018 Prepare, in good form, acomparative income statement, beginning with income fromoperations, for Skysong Corporation for the fiscal years ended May31, 2017, and May 31, 2018. This statement will be included inSkysong’s annual report and should display the appropriate earningsper share presentations. (Round earnings per share to 2 decimalplaces, e.g. $1.55.) SKYSONG CORPORATION Comparative IncomeStatement For Fiscal Years Ended May 31, 2017 and 2018 2017 2018 $$ $ $ Earnings per share: $ $ $ $ Question Attempts: 0 of 5 usedSave for later Submit Answer